Business Segments

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Business Segments

The application of segment reporting requires significant judgment in determining our operating segments. Operating segments are defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the Company’s chief operating decision makers to evaluate performance, make operating decisions and determine how to allocate resources.  The Company’s chief operating decision makers evaluate the Company’s performance in various ways, including: (1) the results of our individual homebuilding operating segments and the results of our financial services operations; (2) the results of our homebuilding reportable segments; and (3) our consolidated financial results.

In accordance with ASC 280, Segment Reporting (“ASC 280”), we have identified each homebuilding division as an operating segment because each homebuilding division engages in business activities from which it earns revenue, primarily from the sale and construction of single-family attached and detached homes, acquisition and development of land, and the occasional sale of lots to third parties. Our financial services operations generate revenue primarily from the origination, sale and servicing of mortgage loans and title services primarily for purchasers of the Company’s homes and are included in our financial services reportable segment. Corporate is a non-operating segment that develops and implements strategic initiatives and supports our operating segments by centralizing key administrative functions such as accounting, finance, treasury, information technology, insurance and risk management, legal, marketing and human resources.

In accordance with the aggregation criteria defined in ASC 280, we have determined our reportable segments as follows: Northern homebuilding, Southern homebuilding, and financial services operations.  The homebuilding operating segments included in each reportable segment have been aggregated because they share similar aggregation characteristics as prescribed in ASC 280 in the following regards: (1) long-term economic characteristics; (2) historical and expected future long-term gross margin percentages; (3) housing products, production processes and methods of distribution; and (4) geographical proximity. We may, however, be required to reclassify our reportable segments if markets that currently are being aggregated do not continue to share these aggregation characteristics.

The homebuilding operating segments that comprise each of our reportable segments are as follows:

Northern	Southern
Chicago, Illinois	Orlando, Florida
Cincinnati, Ohio	Sarasota, Florida
Columbus, Ohio	Tampa, Florida
Indianapolis, Indiana	Austin, Texas
Minneapolis/St. Paul, Minnesota	Dallas/Fort Worth, Texas
Detroit, Michigan	Houston, Texas
	San Antonio, Texas
	Charlotte, North Carolina
	Raleigh, North Carolina

The following table shows, by segment, revenue, operating income and interest expense for 2020, 2019 and 2018, as well as the Company’s income before income taxes for such periods:

	Year Ended December 31,
(In thousands)	2020		2019		2018
Revenue:
Northern homebuilding	$	1,256,405	$	1,027,291	$	933,119
Southern homebuilding	1,702,727		1,417,676		1,300,967
Financial services (a)	87,013		55,323		52,196
Total revenue	$	3,046,145	$	2,500,290	$	2,286,282
Operating income:
Northern homebuilding (b)	$	125,588	$	96,239	$	86,131
Southern homebuilding (c)	202,561		115,082		95,912
Financial services (a)	53,395		27,350		27,482
Less: Corporate selling, general and administrative expense	(62,283)		(51,582)		(46,364)
Total operating income (b) (c) (d)	$	319,261	$	187,089	$	163,161
Interest expense:
Northern homebuilding	$	2,465	$	7,474	$	7,142
Southern homebuilding	4,292		10,250		10,073
Financial services (a)	2,927		3,651		3,269
Total interest expense	$	9,684	$	21,375	$	20,484
Equity in income from joint venture arrangements	$	(466)	$	(311)	$	(312)
Acquisition and integration costs (e)	—		—		1,700
Income before income taxes	$	310,043	$	166,025	$	141,289
Depreciation and amortization:
Northern homebuilding	$	3,342	$	2,944	$	2,448
Southern homebuilding	4,468		4,778		4,472
Financial services	3,034		2,095		1,281
Corporate	6,734		6,133		6,330
Total depreciation and amortization	$	17,578	$	15,950	$	14,531

(a)Our financial services operational results should be viewed in connection with our homebuilding business as its operations originate loans and provide title services primarily for our homebuying customers, with the exception of an immaterial amount of mortgage refinancing.

(b)Includes $0.6 million and $5.1 million of acquisition-related charges taken during 2019 and 2018, respectively, as a result of our acquisition of Pinnacle Homes in Detroit, Michigan on March 1, 2018.

(c)Includes a $0.9 million net charge for stucco-related repair costs in certain of our Florida communities (as more fully discussed in Note 8 to our Consolidated Financial Statements) taken during 2020.

(d)For the years ended December 31, 2020, 2019 and 2018, total operating income was reduced by $8.4 million, $5.0 million and $5.8 million, respectively, related to asset impairment charges taken during the period.

(e)Represents costs which include, but are not limited to, legal fees and expenses, travel and communication expenses, cost of appraisals, accounting fees and expenses, and miscellaneous expenses related to our acquisition of Pinnacle Homes. As these costs are not eligible for capitalization as initial direct costs, such amounts are expensed as incurred.

The following tables show total assets by segment at December 31, 2020 and 2019:

	December 31, 2020
(In thousands)	Northern		Southern			Corporate, Financial Services and Unallocated		Total
Deposits on real estate under option or contract	$	5,031	$	40,326		$	—	$	45,357
Inventory (a)	847,524		1,023,727			—		1,871,251
Investments in joint venture arrangements	1,378		33,295			—		34,673
Other assets	37,465		57,588		(b)	596,711		691,764
Total assets	$	891,398	$	1,154,936		$	596,711	$	2,643,045

	December 31, 2019
(In thousands)	Northern		Southern			Corporate, Financial Services and Unallocated		Total
Deposits on real estate under option or contract	$	3,655	$	24,877		$	—	$	28,532
Inventory (a)	783,972		957,003			—		1,740,975
Investments in joint venture arrangements	1,672		36,213			—		37,885
Other assets	21,564		52,662		(b)	223,976		298,202
Total assets	$	810,863	$	1,070,755		$	223,976	$	2,105,594

(a)Inventory includes single-family lots, land and land development costs; land held for sale; homes under construction; model homes and furnishings; community development district infrastructure; and consolidated inventory not owned.

(b)Includes development reimbursements from local municipalities.